Minister Kelvin Smith and his wife Tracy are ordained in the local Baptist church. In the current year, Kelvin receives payments of $150,000 from the church for his services ($60,000-compsensation and $90,000 housing allowance). Kelvin and Tray own a home in incurred actual expenses of $72,000. The home is located in a nice neighborhood and the fair value of the rental market would be $55,000. This is his first tax return as a full time minister and Kelvin wants to know how to report these amounts on their current tax return. Please write a tax letter to Kelvin and Tracy to explain your findings.

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